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We need more immigration, not less

Low fertility and longer living means European countries face shrinking workforces and mounting debt—unless they rethink migration
March 3, 2022

How far ahead should we expect our politicians to look? As far as their next election, or far enough ahead to protect our children’s livelihoods? It’s a fairly straightforward choice because the UK, along with the whole of Europe, has arrived at a fork in the road. Governments can either open their immigration policies widely, and perhaps risk electoral suicide, or go for the inertia option that may guarantee their own survival but condemns younger generations to mounting indebtedness and plunging living standards.  

By keeping migration to a trickle in recent years, politicians have so far avoided the political meltdowns threatened by populists. But they are also ensuring that societies throughout Europe will be saddled with the crippling costs of ageing, shrinking workforces and dwindling tax receipts. 

This has nothing to do with Brexit, or the bitter left-right struggles over immigration in many parts of Europe, especially in the run-up to April’s French presidential elections. It has everything to do with demographics. Europe is beginning to feel the effects of four decades of low fertility and surging longevity, and stands on the threshold of a devastating manpower crisis. 

This impending disaster is scarcely mentioned by politicians, though economists, statisticians and demographers have been trying for years to alert decisionmakers to it. Most of us know that Europe’s population is shrinking, but we’re less clear that ageing is the greater problem.

The active, tax-paying workforces of the EU and UK will shrink by 33m people by mid-century. Instead of sustaining the economy, these people will be moving to the other side of the balance sheet and weighing ever-more heavily on healthcare and social services.

Until rising living standards and miraculous advances in medical science upset the apple cart, the generational balance was immutable. Now, however, economists’ “dependency ratio” shows the scale of the looming problem.

Postwar Britain enjoyed a healthy ratio of five workers per pensioner. By the closing quarter of the last century the European average was 4:1 and the IMF was forecasting it to fall to 2:1 by the middle of the 21st century. But not long ago the European Commission revealed it has already hit 2.9:1 and projected a ratio of 1.7:1 by 2070. As Dickens’s Mr Micawber would say: “result, misery.”

Healthcare and pension costs in most of Europe, including the UK, make for dismal reading. The pandemic is highlighting the NHS’s voracious financial appetite, yet its present needs pale against future costs. European countries on average spend almost 8 per cent of GDP on health, and over the next 25 years ageing will push that to 11 per cent.

By then, four Europeans in 10 will be over 65. Pensions originally designed to span a decade or so of retirement are already bankrupting public and private insurers, and there’s worse to come. The OECD “rich man’s club” of high-income economies foresees a pensions Armageddon. The unfunded pension liabilities of 20 of its 37 countries now stand at $78 trillion, which isn’t far off  the $85 trillion recorded in 2020 for our entire global GDP.

“Cheer up, it may never happen!” seems to be the motto in EU capitals, and in Westminster and Whitehall too. But these econometric calculations point to an unassailable truth. Europe lacks manpower. Despite the talk of automation, robots and artificial intelligence coming to the rescue, productivity improvements have been minimal.

Governments can either open their immigration policies widely or condemn younger generations to mounting indebtedness

The obvious solution of bringing more people to Europe is widely rejected. The case for boosting legal immigration is countered at almost every turn by myths persuading public opinion that migrants are benefit scroungers and “steal” jobs, competing unfairly through low wages. That Britain along with the rest of Europe is gripped by serious labour shortages has done little to shake these prejudices.

Legal migration is supposedly advocated by most European governments, including the UK’s. In the EU, it is running at about half the annual 500,000 total of 10 years ago, and work visas are down by 70 per cent. These figures are laughable when set against the target of 100m migrants by 2050 that former Spanish prime minister Felipe González recommended a decade ago as the cure for our demographic ills.  

It’s not too late to rethink migration. Policy U-turns could initiate rising quotas of economic migrants and political refugees with a goal of reaching several million across Europe by 2030 and tens of millions by 2040. 

Yes, that would mean considerably more spending on housing, education and training, while the political costs are certainly daunting. But the alternative is too awful to contemplate: it is a Europe reduced to geriatric impotence by painful spending cuts that could have been avoided.